What do the initial franchise fees for All States M.E.D. generally consist of?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company recognizes its franchise revenues in accordance with Statement of Financial Accounting Standards ASC 606, which allows that franchise fees from franchise sales be recognized, net of an allowance for uncollectible amounts, if the initial "franchise fee" is distinct from the franchise license. A portion of the initial franchise fee is allocated to certain distinct performance obligations and is recognized as revenue when the Company has determined it has provided substantially all of its material obligations required to recognize revenue related to those distinct performance obligations. Initial franchise fees generally consist of pre-opening services determined by Franchisor that are separate and distinct (typically upfront and not brand specific)
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the initial franchise fees generally consist of pre-opening services determined by the franchisor. These services are considered separate and distinct, typically upfront and not brand-specific.
All States M.E.D. recognizes franchise revenues in accordance with accounting standards that allow franchise fees from franchise sales to be recognized, net of an allowance for uncollectible amounts, if the initial "franchise fee" is distinct from the franchise license. A portion of the initial franchise fee is allocated to certain distinct performance obligations. Revenue is recognized when All States M.E.D. has determined it has provided substantially all of its material obligations related to those distinct performance obligations.
For a prospective All States M.E.D. franchisee, this means that the initial franchise fee covers specific services provided before the business opens, rather than just the right to use the All States M.E.D. brand. The fees are tied to the completion of specific obligations by All States M.E.D., offering some assurance that the franchisee will receive the support they are paying for. However, the FDD does not specify exactly what pre-opening services are covered by the initial franchise fee.